PHX Minerals closed a new four-year $100 million senior secured credit facility with an initial borrowing base of $27.5 million.
The new credit facility, which is being led by Independent Bank and includes MidFirst Bank, replaces the Company’s prior credit agreement, which was with a lending syndicate led by Bank of Oklahoma.
“We are delighted to be entering this new credit facility with Independent Bank. We believe that Independent Bank is the right partner for PHX at this time, and the new credit facility represents another critical step for our transformation into a pure-play mineral-focused company, as the new credit facility increases our financial flexibility for future growth,” Chad Stephens, PHX’s President and CEO, said.
The relevant terms and covenants contained in the new credit facility are summarized below with comparisons to those in the prior credit facility:
- Initial Borrowing Base: $27.5 million, compared to $28 million under the prior credit facility;
- Quarterly Commitment Reduction: none required, compared to $500,000 per quarter under the prior credit facility;
- Interest Rate: LIBOR plus applicable margin; based on third fiscal quarter-end 2021 total debt outstanding of $19.9 million, the opening effective interest rate is expected to be 3.75%, compared to 4.00% under the prior credit facility;
- Maximum total leverage ratio covenant: 3.5x, compared to 3.75x under the prior credit facility;
- Minimum hedging requirement: 45% of production in forward months one through 12 and 25% of production in forward months 13 to 18, compared to 75% and 50% of production for the respective periods under the prior credit facility;
- Maturity Date: Sept. 1, 2025, compared to Nov. 30, 2023, under the prior credit facility; and
- No dividend payment restrictions, subject to maximum total leverage ratio of 2.5x, compared to $1.5 million annually, subject to maximum total leverage ratio of 2.25x under the prior credit facility.
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